Delian Asparouhov: DoD's continuing resolution freezes new defense tech programs, threatening VC-backed startups

Temple of Technology. Welcome to the show, Delian. How you doing? What's going on? What's up, boys? Thanks for having me on again. Excited to uh catch up. Appreciate it. We're calling this uh Delta V with Delhi in uh our little space update. Uh we're still workshopping the name, but uh we got to come on.

We got to come up with a catchy pathy phrase for for all the regular guests. But very excited to have you here. Uh can you give us an update? Let's start with the rescued astronauts. Uh you got community noted. Uh you know, the the X army really came out for you. Uh how'd you process the landing? Break it down for us.

You know, I I I already have enough of an ego that I don't need to like, you know, overly um you know, sort of praise myself even more. But all I'm going to say is um you know they go up I forget the exact timing but like you know beginning of June last year.

I send out this tweet that's like end of June where I was just like losing my mind cuz I was like how is nobody talking about this? Like these guys are like totally stuck up there.

It's clear that like you know Boeing and NASA clearly are panicking and realize that like they can't take these guys down on Starlininer and nobody's even begun a plan for how to bring these guys down.

And so I tweet basically like hey why is nobody talking about the fact that there's like two American astronauts like stranded in orbit and like look if it were like Apollo days or like space shuttle days and like you know they were stuck up there for an extended period of time people would 100% be using like the word stranded and so I was just like so confused as to why like this just was getting no attention and then I literally just felt like I was being [ __ ] lied to when I get community not and it's like oh like they're totally fine.

They're doing some like final checkouts on Starliner. I'm like has anybody like read the comms that NASA and Boeing are putting out? Like this thing is clearly in like a very bad state. definitely no way they actually like decide to bring astronauts, you know, sort of down on it.

And the word stranded had not yet been used a single time in any like NASA comms in anybody's like coms about the entire mission. Within 24 hours of my tweet going viral, NASA put out a press release explicitly saying the astronauts are not stranded.

And like then the word stranded became like totally in the lexicon around the mission. Yeah, I'd like to think that it had something to do with that, you know, sort of viral tweet.

Maybe there were other people that you know sort of influenced it and then got even like literally you know the White House's communications this past week said you know we brought back the stranded astronauts. So I'm going to claim credit on stranded being the case.

The entire thing to me was you know sort of crazy you know not to give you know there's a lot of history that we could give here but like um when commercial crew was originally getting started the original plan by NASA was to only you know do it as a sole source award just to Boeing.

SpaceX was seen as a bunch of, you know, you know, cowboys hoo-ha that had no chance of actually being able to be trusted with, you know, some human astronauts on board.

They actually had to delay the announcement because in like the final hours, they basically decided to do it as a split award where they gave Boeing, by the way, it's crazy. Like they literally just gave Boeing twice the price per seat.

So, it's just like Boeing, it's like, hey, the price is like $10 for SpaceX and for Boeing it's $20 and like we're just going to pay them more. Why? Because, you know, it's because Boeing has a 200 person lobbying team. Um and so there was like a very near world where like we only had Boeing as the only option.

It was only like in the final hours of that program that like SpaceX was you sort of given an alternative and like thank God otherwise like we would have been begging the Russians to bring our astronauts back and you know it's a little tricky to do when you're also like you know providing you know weapons to their you know enemy.

So, you know, that would be geopolitical. A lot of people, you know, would say this was like political. Was it uh do you think these astronauts are coming back like deeply radicalized? Like are they you like you're up in space a long time. You got a lot of time to think.

Uh I don't know how the internet connection is up there if if there if there even is one. You know, they don't have necessarily the the bandwidth to doom scroll.

uh were are they coming back sort of like deeply uh you know are are they going to be like kept off camera like you know you guys got to kind of stay off the mics for a while while you cool off or you know what do you think their reaction is to the whole thing?

Well now that it's the Trump administration I don't think that Trump will you know sort of limit them from the mics.

But I think what's incredibly clear is SpaceX offered to bring the astronauts back sooner and because it was in the midst of the election cycle and because Musk was campaigning for Trump the Biden administration turned down that offer.

There's a whole lot of [ __ ] you know, jackos and wahoos that will try and convince you otherwise. Hey, this is the pre-existing ISS schedule. This is when Dragon was scheduled to go up, etc. So, they had to stay up there. No way.

If somebody had gone Elon and said, "Yes, like according to the standard NASA budgetary process, this was supposed to fly then, but like one of the astronauts has like, you know, bone density issues and is having health problems up there.

We want to bring her down like this week because it was planned to be like a three-week long mission, not a ninemonth long mission. " They 100% could have done that. The Biden administration very much so tried to challenge those you know sort of facts and deny that. Um Dems today even have tried to deny that.

Crazy is like typically NASA astronauts at least in the like you know you know past 20 years have not ever really made even the slightest inklings of political statements.

Butch and Sunni like basically confirmed these facts like they basically made it clear hey we could have been brought back earlier and we were like denied the opportunity to be brought back earlier.

And if I were them, I'd be pretty pissed cuz like, you know, Sunni, I believe, like did suffer bone density issues and was not supposed to be up there, you know, sort of for, you know, for that long.

And so, I wouldn't be surprised if you you've already seen them push the fold on what they've been willing to say behind the mic. I wouldn't be surprised if they like do that even more now that they're on the ground and you're in a Trump administration. Uh, do you think that NASA has a talent crisis?

You could imagine that Boeing is finding it difficult to compete on, you know, getting the best talent when there's SpaceX and VA and all these other players that are sort of competing for the the best and brightest in the world.

I imagine Na NASA is very prestigious, but at the same time, you're going to work in this government organization and there's a bureaucracy and you know, if you're 22 years old right now and your your your hero is Elon Musk and Elon Musk is beefing on the timeline with NASA, like where do you where are you going to go, right?

Um yeah, I mean, you know, I do think they have a real challenge. They also have a bit of an identity crisis where they are turning more and more to buyers of commercial off-the-shelf hardware versus like developers of it. And so what does that transition look like?

But then if you only have people internally that are just buyers and don't have an engineering background, how do you know that they're buying the best stuff? At the same time, look like you know um NASA also like flew a helicopter on [ __ ] Mars. That's insane. Like that's like a crazy capability.

Nobody else would be capable of doing that. Yes, they worked with air environment as like the contractor for that, but they had like such a heavy hand in that they're now talking about like flying a helicopter on Mars. They did like the, you know, sort of six minutes of uh what is it called?

Like when the Curiosity rover came down, like the six minutes of, you know, hell or whatever it is. Um they're like, you know, literally using like retro boosters to like sky crane down a you know, you know, um a rover. So like there's a lot that NASA does that is like requires crazy talent.

But I think what they need to, you know, sort of go through and I think like, you know, Trump administration is likely aligned with this. Jared Isaacman, the likely incoming um administrator is NASA needs to basically just focus on two core parts.

One, the core of space capabilities, they just become buyers of and they just buy things off the shelf. And then where they're developing technologies directly themselves, it should only be the really radical super far out things, right?

Like there's just not commercial space companies that are like talking about like we're going to build like off-the-shelf Mars helicopters. We talked about this. We talked about this last time like asteroid deflection is something that NASA should work on because it's not that commercial, right?

It's like we maybe need to do it once every 50 years. Hopefully not. And then NASA you can be the hero. Yeah. Can we move on to the continuing resolution? Can you break that down for us? Yeah. Yeah.

Yeah, I mean it kind of relates to some of the NASA stuff too where you know it's been interesting to see you know this quarter feels like it's been the most um active in you know sort of defense tech aerospace investing in a long time.

some of which feels rational, some of which feels sort of crazy over top over the top. And it's just interesting to have this like massive flow of capital, you know, from, you know, venture investors going into this field while at the same time the flow of capital from DC literally has been halted, right?

Um, so, you know, for the, you know, sort of less informed, you know, viewers, um, ultimately defense tech and aerospace companies that are selling to the government. Yes, there's commercial, you know, sort of use cases for these technologies.

Those aren't related to government budgets, but are ultimately, you know, a lot of these reliant on government budgets. Um, you know, about 10 days ago, um, the, uh, House and Senate agreed upon a year-long continuing resolution.

And so, what that basically means is, um, both the House and the Senate had previously passed budgetary bills that increased basically defense spending, had various NASA spending, etc. Um, couldn't come to an alignment on that, couldn't come to an alignment with the presidents.

And so the ultimate, you know, sort of call by all parties was we're actually just going to freeze to whatever fiscal year 24 levels, you know, basically are. Now, in that CR, they did give the DoD, hey, we know that you guys are thinking about like, you know, sort of reprogramming.

And so, as you're shifting budgets around, make sure that it reflects whatever like, you know, House appropriators, you know, and, you know, Senate appropriators basically had in those budgets that they basically put out, you know, sort of end of February.

But in the grand scheme of things, this mostly means a freezing of new ads, any new programs. And as you can imagine, who's the biggest, you know, sort of beneficiary of that? Well, incumbents have their programs continuing to be funded, right? And so the, you know, Loheed, Rathons, etc.

, Northrups, you know, might not be experiencing as much growth as usual, but, you know, they're, you know, they're generally, you know, continuing to be funded.

uh versus all of the net new entrance while are experiencing massive inflows of venture capital dollars have literally been told by the US government like expect zero starts and so it's just a little odd to me that that's not a thing that is being talked about by all these people that are talking about like the gundo dynamism this that it's like well who talks the most on X it's it's founders and investors and neither have an incentive to really say like hey by the way none of us are making anything back anytime soon.

Yeah, I mean I don't know as like a paranoid founder I like to talk about this stuff because you know I want to make sure that like the thing that I'm working on you know survives for a very long time and is like sustainable but like to be clear what this means practically is like you know basically this year's budget you know was basically end September 31st is completely frozen.

Now what's being you know begun to be worked on is like the fiscal year you know so 26 vehicle that's going to you know first have to come from like you know sort of the president you know putting forth you know sort of a plan that you'd expect to make it over to you know sort of the house and senate in like roughly the May period that means it's going to make it onto the floor in like you know sort of June July hopefully gets passed by like September October realistically though we basically have not hit that September 31st deadline for the past I don't even know what it is like 10 plus years and so that continuing resolution is probably going to extend for at least another 30 potentially 60 days.

So, you know, potentially until the end of the year, that means that like new budget actually doesn't start until, you know, basically January of next year. And so, all these companies that are raising all this capital for all these things that they would like to start, yes, there's going to be reprogramming.

Yes, like the president is, you know, doing ship building and CIA, etc. , but like a lot of this stuff is very much so frozen. And, you know, what people don't realize is let's say, you know, you have, you know, sort of CIA or CCA, sorry.

um and you know sort of ship building those five-year plans that the DoD put together where they were like look in order to do the early R&D in 2024 we need 100 million in 25 we need 200 million in 26 we need 300 million well because we're now frozen at 24 levels that means it's only 124 and 125 so now when you're looking at 26 it's like are you making up for the fact that 25 you know sort of was you know low and you're trying to scale all the way to 26 you're like in a real budgetary hole so like new programs are also in a way worse state because it's typically the new programs that are the ones that grow that are growing and so if it's flat, you're both trying to figure out do you make up for last year and how do you keep up with like what the program needs or are you like really pushing on milestones but if you're pushing on milestones now is it relevant to Taiwan if people are thinking about that needing to be ready in 2027 2028 and so does that now make the DoD just want to keep shifting budget to incumbent programs that can deliver by 2728 even if they're not as capable right so there's just like a lot of things where it's just like you know I'm a you know obviously mega bull on like the team at Android because like they have the bench the capability the you know set of different product suite different programs going like they will navigate this but like I don't know there's going to be like five and rolls and I think VCs are investing like there's going to be you know sort of five and rolls right now but without even understanding the basics of like the budgetary you know sort of process on the hill they're just you know sort of slinging checks you know based off of you know the you know zip code of where somebody's office is if you're a if you're a yeah if if you're an American dynamism defense tech investor are you looking at you know are are you seeing more pitches in Europe right now.

If the anderol of Anderol is Anderol here in the US, but then European uh Europe is like remilitarizing uh at least Western Europe, you know, are you seeing pitches come in? Uh would people just kind of divert dollars over there because there's potentially a lot more willingness to spend.

I think you're starting to see that happen. Obviously, both the Overton window has changed there. The like, you know, sort of budget, you know, sort of growth there in is insane. And if you think that like US incumbents are like stodgy, old school, etc.

EU incumbents are like, you know, sort of that, you know, jacked up to the nines. And so I do think there's a real opportunity there. Um there aren't a ton of like super competent players.

Um and so, you know, I wouldn't say that like the quality of what we get, you know, sort of inbound, at least at Founders Fund is, you know, something, you know, super high in Europe.

The thing that I will say though is at least the biggest check that I've ever, you know, sort of led as like a net new, you know, portfolio company investment.

So not just like follow ones obviously like we've deployed mega checks into ramp but that was after doing seed in series A um but we're investing about $36 million into basically a European aerospace defense you know sort of type player and that's like our first check into the company um now part of it is that the company was already performing very well irrespective of the EU tailwinds and then now with reindustrialization etc we're like even more bullish you know sort of on the you know company but we're also getting to do it at a price that is like highly differentiated relative to like the, you know, um, uh, 94129, you know, sort of, uh, sorry, shoot, that's the SF, you know, zip code.

Oh, yeah. 056, um, you know, zip code. Uh, with all this turmoil at the DoD and with the budget and the continuing resolution, is it more important than ever that these companies figure out commercial applications? We talked to a company, Albido. They're a satellite company yesterday.

It seemed like even if the government doesn't want to buy the ISR capabilities, there are hedge funds and oil and gas providers that want, you know, high resolution images from VLOO and so is that something that you I mean, you've thought about this at Varta with pharma and DoD contracts. How do you think about that?

And is that more important going forward? Yeah, but I think it's like one of these things that's like very, you know, sort of hard to pivot to depending on how you've set up your business, right? So, you know, um, take a business that say like Seronic.

I'm not sure there's that many commercial use cases for, you know, sort of small scale autonomous surface vessels or take a company, you know, like Apex that is, you know, mostly selling, you know, sort of commercial satellites.

Now, some of them are to like, you know, various defense groups, but they also have a bunch of commercial sales, right? So, I think it's one of these things that it's really hard to like pivot from one approach to the other.

Maybe somebody like Palunteer has clearly shown it where they were super DoD focused for a long time and now have a massive commercial business. That felt like it happened at like the very very late stages of the company.

I think your ability to like pivot from, you know, either being dual use from the get-go or being defensive from the get- go, you kind of have to choose one. And we've obviously chosen the like, you know, sort of dual use from the get- go. Does that give us some cons when it comes to like defense programs? Yeah.

Because like we're not as willing to like change around our architecture to totally match defense needs. But the pros is also in a continuing resolution year, I also have a lot of commercial work that I can continue to go pursue.

There's pros and cons, I think, to sort of both approaches the I don't think you're going to see that much shifting. It's just too hard to shift. Well, if the DoD isn't buying kamicazi drones, I'm happy to buy them personally for my next hunting trip. Uh, give me the C4. Let's lift the ITAR control rules.

Get me the suicide drone. I want to go hunting for some big game. Uh, thank you, Delian, for coming on. Do you have a last question? last. Yeah, we we got another guest coming on, but uh quick question.

Do you think that the deal without commenting on real uh rippling a deal, do you think that was a wakeup call for the defense industry around, hey, if this is happening in HR tech, like we got to take everything way more seriously, right?

Because obviously, you know, people probably anybody that would be competing with Varta knows who else is like bidding on the contract. It's like common knowledge. It's not the same type of information advantage.

If people are willing to like break the law to steal customer data, CRM data for HR tech, you know, it it to me such should just be this massive wakeup call around if you're doing anything that's critical to national security. You need to take your your your own security at your company 10 times more seriously. Yeah.

I mean, I think if you look at the, you know, sort of SpaceX, the Andreals, the Vartas, the Hadri, etc.

gone down the per capita number of like IT security people you basically need on staff because you're just like ITAR compliance etc means these companies are thinking about it all the time now at the same time are there like Chinese spies and you know foreign spies sniffing around all these almost certainly are there other corporate spies sniffing around this all the time absolutely but I do think you see this stuff a bit less in terms of you know actually having these like you know sort of totally negative effects partially because like you know with rippling deal it's like there it's like okay let's pull like which software features etc When it comes to something like Varta, man, it's like what would you even pull from our servers to figure out how to do what we do?

It's like you could get this CAD file, this thing, but it's like you need the supply chain, you need to cut the metal, you got to integrate it, you got to know how to test it, etc.

It's like even if you gave me access to our full server base, you gave me a team of like 30 engineers and you tell me go replicate VA, it would still be like a really hard problem.

Like if you look at the, you know, sort of Chinese rockets, they look a hell of a lot like the Falcon 9 and they're still not landing, right? And so, you know, I think it's clear that like the Chinese definitely ripped a lot of stuff from SpaceX at some point or another.

It's really hard to, you know, sort of prevent that from happening. You know, can't blame, you know, anybody for having that happen to their company. But also, the Chinese still aren't landing rockets.

Now, their solution has just been, let's build as many rockets as possible and screw it, you know, rather than purposely landing them on barges, we're just going to ditch them over Chinese villages and like, you know, dump propellant on like our, you know, poor villagers. But like, whatever.

We're going to set up, you know, the first Chinese lunar base before the Americans cuz like we're just willing to murder citizens non-stop on the way to a goal. And you know, unfortunately for America, you know, we don't, you know, murder our citizens. We only murder our presidents. JFK files, the deep cut.

Hey, well, at least we didn't at least we didn't land on the dolphins yesterday. Yeah, that's good. The dolphins seemed like they were good. Let's end on a high note. The dolphins work from Assad, though. That's all I'll say. Maybe. You never know.

As soon as you get off, there's there's some crazy what happened on the ISS. There's some crazy NASA lore around dolphins. Don't Google it. Don't Google it. But uh Okay. Uh well, thank you, Deli. We'll talk to you soon. Have a great one. Always a good time.

I think we got Jake Adler coming in the Temple of Technology in just a few minutes. He is building military medicine, biotech for the next generation soldier. Very exciting. And we got to see if there's some dual use applications for that because we podcast pretty hard, harder